Existing home sales rose unexpectedly in October to their highest level in a year, a good sign for the housing market’s growth.
Sales of previously owned homes hit a 5.26 million annual pace, the best showing since September 2013 and an increase of 1.5 percent from a revised 5.18 million level in September, the National Association of Realtors said Thursday.
{mosads}”Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth,” said Lawrence Yun, NAR chief economist.
Yun said the job market’s growth in the past six months “bodes well for solid demand to close out the year.”
The median price last month was $208,300, which is 5.5 percent above October 2013.
Housing inventory at the end of October fell 2.6 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, the lowest level since March.
“The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory,” Yun said.
“However, more housing starts are needed to increase supply, meet current demand and keep price growth in check.”
All-cash sales, which are usually made by investors, represented 27 percent of transactions in October, up from 24 percent in September but down from 31 percent in October of last year.
Individual investors purchased 15 percent of homes in October.
Meanwhile, mortgage rates fell to their lowest level in more than a year, dropping to 4.03 percent for a 30-year fixed-rate loan, according to Freddie Mac.
The share of first-time buyers in October remained at 29 percent for the fourth consecutive month.
A separate NAR survey released earlier this month showed that the annual share of first-time buyers fell to its lowest level in nearly three decades.
Distressed homes — foreclosures and short sales — were in the single digits for the third month this year, decreasing to 9 percent in October from 10 percent in September.
Single-family home sales increased 1.3 percent to a seasonally adjusted annual rate of 4.63 million in October from 4.57 million in September. They are 2.9 percent above the 4.50 million pace a year ago.
Regionally, sales increased in three of four regions.
Sales in the Northeast climbed 2.9 percent, they jumped 5.1 percent in the Midwest and were up 2.8 percent in the South.
In the West, sales fell 5 percent last month.